Hi Tan,
On the subject about land banking, how come the relevant authorities here not taking action whereas our neighbouring country is taking action.
http://www.malaysianbar.org.my/legal/general_news/companies_commission_raids_three_companies_over_illegal_land_investments.html
I believe that Malaysia is not exposed to Lehman Brothers Minibonds but doing something as a watch dog!
JLN
Monday, October 27, 2008
Can investors understand CDO?
Dear Mr. Tan,
Financial Times interviewd Dr. Tony Tan in Feb 2008. Dr. Tan said,
"We believe that one of the reasons why we have, for example, weathered these CDO difficulties well is because we have always put risk management as a very high priority. We studied CDOs on many occasions in the past several years. We could not understand who was bearing the risk there. We looked at this many times and we decided several years ago, as a policy, that we will not invest in CDOs, so we have no direct exposure to CDOs at all. Of course, we also invest in funds and they invest in CDOs, so indirectly we do have some exposure, but as far as direct exposure is concerned I think our risk management framework works quite well."
If GIC admits it does not understand CDO risks, how can MAS MD said, "There will also be a group he described as 'knowledgeable and experienced. This group should have understood the risks of investing in these products and take responsibility for their actions."
Financial Times interviewd Dr. Tony Tan in Feb 2008. Dr. Tan said,
"We believe that one of the reasons why we have, for example, weathered these CDO difficulties well is because we have always put risk management as a very high priority. We studied CDOs on many occasions in the past several years. We could not understand who was bearing the risk there. We looked at this many times and we decided several years ago, as a policy, that we will not invest in CDOs, so we have no direct exposure to CDOs at all. Of course, we also invest in funds and they invest in CDOs, so indirectly we do have some exposure, but as far as direct exposure is concerned I think our risk management framework works quite well."
If GIC admits it does not understand CDO risks, how can MAS MD said, "There will also be a group he described as 'knowledgeable and experienced. This group should have understood the risks of investing in these products and take responsibility for their actions."
Biggest loss in the the structured products
I met a couple at Speakers' Corner on 25 October. They invested a total of $1,775,000 in Jubilee Notes 3, Minibonds 3, Pinnacles 3 and 6. The investments were made in their personal name and in their company's name during February to June 2007.
They asked me to look into their faces. Were they greedy people? Were they people willing to take risk?
I felt so sorry to learn about their devastating loss. I told them that I will try my best ot help them to recover some of their loss.
They asked me to look into their faces. Were they greedy people? Were they people willing to take risk?
I felt so sorry to learn about their devastating loss. I told them that I will try my best ot help them to recover some of their loss.
CLSA Asks 500 Staff to Take Pay Cuts of Up to 25%
Oct. 27 (Bloomberg) -- CLSA Asia-Pacific Markets, the regional brokerage unit of Credit Agricole SA, asked 500 senior bankers and executives to accept pay cuts of as much as 25 percent next year to avoid getting rid of jobs.
The voluntary salary reduction program that was proposed for one-third of the staff last week would reduce basic pay by 15 percent to 25 percent starting in January, according to Chief Executive Officer Jonathan Slone. The participating employees would be paid the salary they forgo and may also receive a bonus payment when profit meets certain targets, he said.
``We think it's the right way to keep our team intact, maintain client service and allow us to expand our offering during a difficult time,'' Slone said in an interview. ``We face challenges like this crisis as a team and when conditions turn, we all share in the benefits as well.''
COMMENT BY TAN KIN LIAN:
This is an excellent way to deal with the recession. It is different from the American approach of retrenching employees.
The voluntary salary reduction program that was proposed for one-third of the staff last week would reduce basic pay by 15 percent to 25 percent starting in January, according to Chief Executive Officer Jonathan Slone. The participating employees would be paid the salary they forgo and may also receive a bonus payment when profit meets certain targets, he said.
``We think it's the right way to keep our team intact, maintain client service and allow us to expand our offering during a difficult time,'' Slone said in an interview. ``We face challenges like this crisis as a team and when conditions turn, we all share in the benefits as well.''
COMMENT BY TAN KIN LIAN:
This is an excellent way to deal with the recession. It is different from the American approach of retrenching employees.
Collapse of the global financial system
The global financial system has collapsed. This has been acknowledged by the leaders of Asia and Europe at their meeting in Beijing. In their statement after the meeting, they pledged to rebuild the global financial system. President Sarkosky of France is providing the leadership.
The pillars of the collapsed system are:
> free market
> minimal regulation
> excessive leverage
> financial engineering
> non-regulated derivatives and swaps
> excessive reliance on private capital
> unsound banking system
> excessive rewards for corporate leaders
What will the new global financial system be based on? The leaders did not provide sufficient details. We must be ready to think of a new paradigm.
The pillars of the collapsed system are:
> free market
> minimal regulation
> excessive leverage
> financial engineering
> non-regulated derivatives and swaps
> excessive reliance on private capital
> unsound banking system
> excessive rewards for corporate leaders
What will the new global financial system be based on? The leaders did not provide sufficient details. We must be ready to think of a new paradigm.
Lehman Brother bond
My friend invested $100,000 in the mini-bond, introduced to him by his stockbroker. He thought that he was investing in the Lehman Brother bond (which was A-rated at that time).
He said, "If I have actually bought the Lehman Brother bond, I would have lost my entire investment anyway. It is not fair for me to lodge a complaint about the mini-bond. It is just my bad luck".
I salute him for his honorable decision.
He said, "If I have actually bought the Lehman Brother bond, I would have lost my entire investment anyway. It is not fair for me to lodge a complaint about the mini-bond. It is just my bad luck".
I salute him for his honorable decision.
A fair compensation
Dear Mr. Tan,
Why should the investors in the mini-bonds and other notes expect to get full compensation for the investments? Surely, they know that there must be some risk, when they expect to get interest rate of 5%, when FD is only 1% or less.
Do you know that the people who invested in stocks are suffering losses of 50% or more. Can we ask for compensation? Even A-rated bonds can fail. Can the investor than ask for compensation from the distributor?
Surly all kind of investments have risk. Why should the mini-bond holders expect full compensation? Why are you supporting this unreasonable claim?
REPLY
I believe that these structured products should not be sold in the first place. If the distributor had properly described the product, it is likely that nobody would have bought them.
In my personal view, the loss should be shared equally between the distributor and the investor (i.e. noteholder). It will not be fair for the investor to shoulder the loss entirely. It is also not fair for the distributor to make a full compensation. I hope that both parties will make a compromise and agree to share the loss equally. Many investors have told me that they will accept such an offer.
Why should the investors in the mini-bonds and other notes expect to get full compensation for the investments? Surely, they know that there must be some risk, when they expect to get interest rate of 5%, when FD is only 1% or less.
Do you know that the people who invested in stocks are suffering losses of 50% or more. Can we ask for compensation? Even A-rated bonds can fail. Can the investor than ask for compensation from the distributor?
Surly all kind of investments have risk. Why should the mini-bond holders expect full compensation? Why are you supporting this unreasonable claim?
REPLY
I believe that these structured products should not be sold in the first place. If the distributor had properly described the product, it is likely that nobody would have bought them.
In my personal view, the loss should be shared equally between the distributor and the investor (i.e. noteholder). It will not be fair for the investor to shoulder the loss entirely. It is also not fair for the distributor to make a full compensation. I hope that both parties will make a compromise and agree to share the loss equally. Many investors have told me that they will accept such an offer.
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